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Israel Finance Minister: Moody's Downgrade Unreasonable, Politicized

People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
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Israel Finance Minister: Moody's Downgrade Unreasonable, Politicized

People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera
People look at an installation with candles which makes out the number of days the hostages have been captive since October 7, as people begin to gather for a protest against Israeli Prime Minister Benjamin Netanyahu's government, at Habima Square in Tel Aviv, Israel, February 10, 2024. REUTERS/Susana Vera

Israeli Finance Minister Bezalel Smotrich on Saturday brushed off a Moody's downgrading of Israel's credit rating, saying the decision linked to the Gaza war was not based on sound economic reasoning and was tantamount to a pessimistic "manifesto.”
"The Israeli economy is strong by all measures. It is capable of sustaining all war efforts, on the front line and home front, until, with God's help, victory is achieved," he said in a response to the decision published on Friday.
Citing material political and fiscal risks for Israel from its war with the Palestinian militant group Hamas, raging since October, Moody's cut the country's rating to "A2", which is five notches above investment grade, while its credit outlook was kept at negative, meaning a further downgrade is possible.
The agency said it expects Israel's debt burden to be "materially higher" than projected before the conflict and defense spending to be nearly double the level of 2022 by the end of this year in its baseline scenario.

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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
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Saudi Transport, Logistics Sector Set for 10% Growth in Q2

An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)
An investor monitors a trading screen at the Saudi financial market in Riyadh. (AFP)

As Saudi companies start reporting their Q2 financial results, experts are optimistic about the transport and logistics sector. They expect a 10% annual growth, with total net profits reaching around SAR 900 million ($240 million), driven by tourism and an economic corridor project.

In Q1, the seven listed transport and logistics companies in Saudi Arabia showed positive results, with combined profits increasing by 5.8% to SAR 818.7 million ($218 million) compared to the previous year.

Four companies reported profit growth, while three saw declines, including two with losses, according to Arbah Capital.

Al Rajhi Capital projects significant gains for Q2 compared to last year: Lumi Rental’s profits are expected to rise by 31% to SAR 65 million, SAL’s by 76% to SAR 192 million, and Theeb’s by 23% to SAR 37 million.

On the other hand, Aljazira Capital predicts a 13% decrease in Lumi Rental’s net profit to SAR 43 million, despite a 44% rise in revenue. This is due to higher operational costs post-IPO.

SAL’s annual profit is expected to grow by 76% to SAR 191.6 million, driven by a 29% increase in revenue and higher profit margins.

Aljazira Capital also expects a 2.8% drop in the sector’s net profit from Q1 due to lower profits for SAL and Seera, caused by reduced revenue and profit margins.

Mohammad Al Farraj, Head of Asset Management at Arbah Capital, told Asharq Al-Awsat that the sector’s continued profit growth is supported by seasonal factors like summer travel and higher demand for transport services.

He predicts Q2 profits will reach around SAR 900 million ($240 million), up 10% from Q1.

Al Farraj highlighted that the India-Middle East-Europe Economic Corridor (IMEC), linking India with the GCC and Europe, is expected to boost sector growth by improving trade and transport connections.

However, he warned that companies may still face challenges, including rising costs and workforce shortages.